I hope this edition of Company Director finds you well and making your way through this challenging period. The AICD’s vision and mission have never been more important: To strengthen society through world-class governance. To be the independent and trusted voice of governance, building the capability of a community of leaders for the benefit of society.
Like all educational organisations, we have had to adapt the way we deliver our courses and resources. To keep our members informed we have produced regular updates on the evolving situation, held regular free webinars for members on COVID-19 and increased our schedule of online courses. By early April, the AICD’s COVID-19 website resources had been viewed more than 100,000 times, nearly 6000 members had registered for a webinar and record numbers had enrolled in the Company Directors Course Self-Paced, the remote-learning version of our flagship course.
The Business Centre and Member Lounges will remain closed and face-to-face education and events will be suspended until the end of June. Face-to-face director development and education is at the core of the AICD and it has placed a significant financial strain on the organisation to defer these programs. We are fortunate the AICD has been well managed over many years and that we have the resources to navigate this crisis and continue to serve you now and into the future.
We have also made difficult but necessary decisions on staffing levels while some activities of the AICD are curtailed. I have volunteered a 25 per cent reduction in my salary and the AICD executive committee has volunteered 20 per cent. The senior leadership team has also volunteered significant salary reductions. Our board receives no director fees in line with our constitution.
We have been focused on regulatory relief and support to organisations struggling through the crisis. Early on, the government took advice from the AICD and turnaround professionals that the insolvency regime needed to adapt. To give directors the confidence to keep their organisations trading through this volatile period, the government granted a six-month safe harbour from personal liability for directors for insolvent trading. This is not a free pass for misbehaviour, but it does change the risk calculation on shuttering an organisation versus trying to get to the other side of the crisis. We also called for flexibility around the requirement to hold physical AGMs, with the Australian Securities and Investments Commission (ASIC) subsequently announcing a “no action position” on virtual meetings.
Further action is needed. The AICD has put a proposal to the Treasurer for a temporary safe harbour from class actions in relation to earnings guidance or forward-looking statements. Extreme economic uncertainty creates a material securities class action risk given the attractiveness of the Australian class actions market to third-party litigation funders. While the ASX’s updated guidance has recommended that companies simply withdraw all guidance, this can only be a stopgap. Instead, as US authorities have recognised, giving companies and their officers the confidence to inform the market as best they can in these circumstances is far preferable.
The AICD is also in dialogue with other stakeholders, the regulators and standard setters on reporting issues, particularly directors’ declarations as to solvency and the assessment of going concern, given the difficulty in making accurate financial assessments.
Preserving the NFP sector
The not-for-profit sector does critical work that our communities rely on, now more than ever. Recognising the enormous challenges that many not-for-profits will face through the crisis, the Australian Charities and Not-for-profits Commission has relieved registered charities of the obligation not to trade while insolvent as long as they have an achievable aim to return to viability. The AICD is working with the ACNC, states and territories to address the implications for incorporated associations.
It will be difficult, if not impossible, for many NFPs to financially withstand the impact of COVID-19 without substantial additional support. The AICD has proposed an urgent relief package for NFPs, including acceleration of committed government funding, default application of government support for businesses to apply to NFPs, a scheme to encourage bank lending to NFPs, and additional incentives for charitable donations. Our advocacy efforts are focused on creating a platform for directors of private sector and NFP organisations to maintain their viability, taking account of stakeholder interests.
The AICD is rebuilding. We have had to adapt and change, but we will see a way through by focusing on how the AICD can meet member needs to rebuild our community and economy.